Average beta of the new stocks

Assignment Help Finance Basics
Reference no: EM133113938

A mutual fund manager has a $200,000,000 portfolio with a beta = 1.2.

Assume that the risk-free rate is 4.0 percent and that the market risk premium equals 6.0 percent.

The manager expects to receive an additional $50,000,000 in funds soon. She wants to invest these funds in a variety of stocks

After making these additional investments, she wants the fund's return to be 11.5 percent.

What should be the average beta of the new stocks added to the portfolio?

Reference no: EM133113938

Questions Cloud

Estimate the price per share for interco stock : Based on the above assumptions and assuming a discount rate for the total firm operations (WACC) of 16.5%, estimate the price per share for Interco's stock.
What is the minimum levels of ocf : What is the minimum levels of OCF to achieve financial breakeven?
Exhibit unethical behavior : Examine the factors that contribute to law enforcement officers protecting peers who exhibit unethical behavior?
Compute beckett b taxable income for the year : Compute Beckett's B taxable income for the year; B uses a three-factor apportionment formula with a double-weighted sales factor
Average beta of the new stocks : A mutual fund manager has a $200,000,000 portfolio with a beta = 1.2.
Analyze how the slippery slope theory : Analyze how the slippery slope theory contributes to ethical behavior in law enforcement.
Calculate the promotional budget : (a) There are five commonly used methods for the determination of promotional budget. One of them is referred to as the "percentage-of-sales" method. Under th
Determine the yield to maturity : The 12?-year $1,000 par bonds of Vail Inc. pay 11 percent interest. The? market's required yield to maturity on a? comparable-risk bond is 8 percent.
Training day-real-life police corruption : Compare and contrast specific value-based decision-making demonstrated by police officers in the film and in a real-life police corruption

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the value of the put option at time

A stock follows a binomial process for two periods. At time t=0 the price is $100,and at time t=1 the stock price is either $120 or $90. If the time t=1 price i

  What would be the current ratio and acid test

tahoulan ltd balance sheet extracts as at 31 decembernbsp20132014current

  What is the value of foggy stock to an investor

What is the value of Foggy's stock to an investor who requires a 16% rate of return?

  Computation of promised yield to maturity for cardiotronics

Computation of promised yield to maturity for Cardiotronic's zero coupon bonds and the probability of default that is implicit in the price of Cardiotronics outstanding zero-coupon bonds

  Basic idea of shareholder value management

Show how to influence value-based performance with certain management actions.

  Determine how much an investor would collect after 25 years

Determine how much an investor would collect after 25 years if $100,000 is deposited and is compounded annually at 10%.

  Why is it difficult to regulate a natural monopoly

Why does a monopolist operate inefficiently? Draw a demand curve, a marginal revenue curve, and a marginal cost curve to illustrate the deadweight loss.

  What is a venture worth?

Return to the discussion of the FrothySlope venture at the beginning of the chapter. Formulate an answer for each of the five questions that are posed under the heading What Is a Venture Worth?

  Explain how the bank of england conducts

Explain how the Bank of England conducts a sterilized intervention to increase the value of the pound against the US dollar

  How much should they pay on march 26

If the company wants to reduce the outstanding balance to $25,000, how much should they pay on March 26?

  Is that investor risk-neutral or risk averse

The one-year risk-free rate is 10%. The corporation has hit on hard times, and the consensus is that there is a 20% probability that it will default on its bonds. If an investor were willing to pay $775 for the bond, is that investor risk-neutral ..

  Complete the excel spreadsheet for return on investment

Using the information given on the pdf file, complete the excel spreadsheet for Return on Investment. Feel free to add calculations and make notes to explain if needed. I will be using this guide in the future, so accuracy is important.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd